Budget 2021 key points: Eight things we've learned from Rishi Sunak's speech
Rishi Sunak has unveiled a raft of new policies during his Budget speech, which will affect all Britons in one way or another.
The Chancellor spoke for nearly an hour in the House of Commons, detailing the government’s plan to rebuild the UK economy out of the coronavirus pandemic.
Here are some of the most eye-catching announcements made by the Chancellor.
Freeports
Mr Sunak’s last surprise - his “rabbit out of a hat” policy - was the Eat Out To Help Out scheme. This time round it was freeports.
The government has pledged to create eight new freeports in England, where businesses will benefit from more tax reliefs, simplified customs procedures and wider support, aimed at driving investment and trade to those regions.
Long touted as one of the benefits of leaving the EU, Mr Sunak said the creation of these freeports would help revitalise parts of the country most in need.
Those included in the initial list of eight include:
Plymouth and South Devon Freeport
Thames Freeport
Solent Freeport
Felixstowe and Harwich Freeport
East Midlands Airport Freeport
Humber Freeport
Teesside Freeport
Liverpool City Region Freeport
Discussions are ongoing with Wales, Northern Ireland and Scotland about the introduction of freeports in the devolved nations.
Unemployment expected to rise
Mr Sunak was sombre when he revealed that official forecasts estimate that unemployment in the UK is expected to rise further.
At the end of last year, the unemployment rate in the UK had risen to 5.1%, with the number of people on company payrolls down 882,000 between February and November 2020.
Despite the furlough scheme helping to keep people in jobs, the Office for Budget Responsibility (OBR) predicts unemployment is likely to rise to 6.5% - putting thousands more Britons out of work.
However, there was more positive news that the UK’s economy is expected to grow by 4% this year, and grow by 7.3% in 2022, raising hopes this boom will create jobs down the line.
Furlough to continue
Rishi Sunak announced plans to extend the furlough scheme until the end of September at Wednesday's Budget, with employers asked to contribute to workers’ salaries from July.
Addressing MPs in the Commons, the chancellor pledged to help businesses and individuals through the “challenging months ahead – and beyond”.
He said the Coronavirus Job Retention Scheme - which has protected more than 11 million jobs since it began - will keep going until the autumn.
However, the government’s contribution to the scheme - which is estimated to have cost around £60 billion - will be tapered off from July.
Stamp duty freeze extended
It was talked about through much of the week, but Mr Sunak finally confirmed he will be extending the freeze on stamp duty land tax (SDLT) for all properties up to the value of £500,000.
Purchases up to £500,000 will continue to be tax free until the end of June, and homes brought up to a value of £250,000 until the end of September.
The scheme, which had been due to expire at the end of March, will mean homebuyers’ could continue to save up to £15,000.
Mr Sunak said: "I can announce today the £500,000 nil rate band will not end on 31 March, it will end on 30 June.
“Then, to smooth the transition back to normal, the nil rate band will be £250,000, double its standard level, until the end of September – and we will only return to the usual level of £125,000 from 1 October.”
He also announced a new 5% deposit scheme for homebuyers, with a government guarantee.
“A policy that gives people who can’t afford a big deposit the chance to buy their own home,” he told MPs. “As the prime minister has said, we want to turn generation rent into generation buy.”
Phil Bayliss, CEO of later living at Legal & General, commented: “The extension ensures a more efficient use of Britain’s existing housing stock can continue, by incentivising older homeowners living in larger properties to downsize.
“These homes can be put to much better use by first-time buyers and growing families but, at present, nearly nine million bedrooms in the homes of older people are lying empty.
“Ultimately, we hope that the holiday might one day inspire the scrapping of the levy altogether. Not only would this inject much-needed liquidity into the market, it would also help first-time buyers, second-steppers and young families climb up the property ladder.”
Eugene Marchese, co-founder and director at Guild Living, commented: "If the Chancellor is looking for a low-cost policy that would keep activity in the housing market going and bring a host of social and economic benefits, he should look to exempt last time buyers from paying stamp duty."
Personal tax allowance freeze
This is a policy which will hit everyone’s pockets, after the Chancellor announced a freeze on the tax-free personal allowance.
Currently, the tax free allowance is £12,500, which is the amount of income you do not have to pay tax on.
This will rise to £12,570 but will be frozen from April 2022 until 2026.
It means more people will be dragged into paying tax as wages increase.
"The higher rate threshold will similarly be increased next year, to £50,270, and will then also remain at that level for the same period," the chancellor said, meaning more people will eventually be in the highest bracket.
ITV News Political Editor Robert Peston said this is a “disguised tax rise” - and means the Conservatives can keep their pledge of not raising income tax.
Corporation tax hike
Corporation tax will increase from 19% to 25% in 2023, Mr Sunak said.
But a new "small profits rate" will maintain the 19% rate for firms with profits of £50,000 or less - meaning around 70% of companies - 1.4 million businesses - will be "completely unaffected" by the tax hike.
Mr Sunak said this will help protect small business owners, while reclaiming more in profit from the biggest firms.
And there will be a taper above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate - around 10% of firms.
Mr Sunak said: "So yes, it's a tax rise on company profits. But only on the larger, most profitable companies. And only in two years' time."
Super-deduction
Mr Sunak heralded the introduction of super-deduction in his speech as the biggest tax cut in modern British history.
The new scheme is estimated to reduce firms’ tax bills by £25bn for the next two years.
A radical new super-deduction tax incentive for companies investing in qualifying plant and machinery will mean for every pound invested, firms will see taxes cut by up to 25p.
From 1 April 2021 until 31 March 2023, companies investing certain areas will benefit from a 130% first-year capital allowance.
Investing companies will also benefit from a 50% first-year allowance for qualifying special rate (including long life) assets.
Alcohol and fuel duty freeze
All duties on alcohol will remain the same, for the second year in a row.
This had been due to rise.
Fuel duty was also frozen for its 11th year in a row. About 60% of the price you pay for fuel is tax - a mixture of fuel duty and VAT.